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TMI Blog2016 (6) TMI 1025X X X X Extracts X X X X X X X X Extracts X X X X ..... r to reopen such assessment, impugned notice came to be issued. The Assessing Officer had recorded reasons for issuance of such notice, which reads as under : "The assessee company is engaged in manufacturing of medical equipments, especially manufacturing of cardio vascular stent. Filed his return of income for the A.Y. 2010-11 on 02.09.2010 declaring income of Rs. 3,97,37,491/- . Assessment u/s. 143(3) was completed on 26.03.2013 by determining total income of Rs. 5,26,15,210/- . 1. It was noticed from Profit & Loss a/c that net sales of Rs. 42,12,62,060/- was shown after deducting the provisions of sales return of Rs. 1,63,80,000/- from sales. As per I.T. Act, provision made in the accounts only for an accrued or known liability is admissible deduction. Thus, deduction allowed for provision of sales return was irregular. The same was required to be disallowed and added back in the assesse's total income. By not doing so, resulted in underassessment of income of Rs. 1,63,80,000/- . 2. As per Section 36(1)(vii), the amount of any bad debt or part thereof which is written off as irrecoverable in the accounts of assessee for the previous year is admissible deduction. Furthe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d claimed doubtful debts, doubtful loans, advances etc., totalling into 3.52 crores which was not a valid claim. 3.1. On the basis of materials on record, learned counsel Shri R.K. Patel for the petitioner raised mainly two contentions; firstly, that the notice for reopening was issued under the instance of Audit Party and that therefore, there was no independent decision of the Assessing Officer that income chargeable to tax had escaped assessment. His second contention was that all three claims were scrutinized in detail during the original assessment proceedings and, therefore, reexamination of such claims even within four years from the end of the relevant assessment year, would not be permissible, on the mere change of opinion. 4. On the other hand, learned counsel Shri Sudhir Mehta for the Revenue opposed this petition contending that the Assessing Officer has recorded valid reasons for issuing notice for reopening. Notice has been issued within a period of four years from the end of Assessment Year. 5. We may advert to second and third grounds recorded by the Assessing Officer in his reasons. In so far as claim of bad debts to the extent of 3.37 crores in terms of Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... a Hospital, Delhi DelhiMathura Road, National Highway 2, SaritaVihar, JasolaVihar New Delhi 10076 400,000 Maya Hospital, Lucknow Gomti Nagar, Lucknow, Uttar Pradesh 138,000 Bangalore Hospital, Bangalore 11, 17th A Cross Btwn 11th & 12th Main, Malleshwaram Malleshwaram, Bangalore, KarnatakaIndia. 35,000 K.L.E.S. Heart Found, (Belgaum) Bangalore Nehru Nagar, Belgaum, Karnataka - India. 704,750 Manipal Heart Foundation, Bangalore 98, HAL Airport Road, Bangalore, KA560017 50,500 NarayanaHrudalaya, Bangalore No.258/A, Bommasandra Industrial Area, Anekaltaluk Bangalore, Karnataka-560099 157,000 Omega Pharmacy (Mangalore), Bangalore MAHAVERR CIRCLE, Mangalore, Karnataka 599,500 Shree Jayadeva Institute of Cardiology, Bangalore K.R. Hospital Campus, Mysore, Karnataka, India 464,000 Trinity Heart Foundation, Bangalore 27, Srerammandira Road, Near RV Teacher College Circle, 560004, Basavanagudi, Bangalore, Karnataka 1,163,000 Sigma Hospital, Hyderabad Aplic Colony Ida,234/ 1, Jeedimetla, 950,000 Jeedimetla PIIC Colony, Jeedimetla, Hyderabad. Usha Cardiac Centre (Vijayawada) Hyderabad Rhoda Mistri Nagar, Hyderabad, Andhra Pradesh 26,909 Cardio Medical Co. Syria ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ank for writing off loans and advance through letter dated June 15, 2009. The assessee company has received letter from Reserve Bank of India dated August 18, 2009 through bank. The assessee has replied the same. The copy of all correspondence regarding this is enclosed here with for your ready reference. We are also enclosing the copy of letter for writing off debts given to bank and the assessee company has not received any communications from bank or RBI in this matter." 5.4. It was only after such detailed, minute scrutiny that the Assessing Officer, in the order of assessment, had made partial disallowance of the petitioner's claim of deduction of bad and doubtful debts. For all these reasons, therefore, the Assessing Officer cannot be permitted to reopen the assessment, on this very ground, since any such reopening, would be based on mere change of opinion. 5.5. Regarding the third ground recorded in the reasons by the Assessing Officer, we may recall, it pertains to assessee's claim of bad debt and of doubtful loans and advances. In this context, the assessee in the letter dated 10.12.2011 to the Assessing Officer had conveyed as under : 10. Details of provision ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he behest and at the instance of Audit Party. 7. We notice that there is no direct evidence to demonstrate before us that this claim of the provision of sale return of Rs. 1.63 crores came up for direct discussion before the Assessing Officer during the original assessment proceedings. However, in the context of the petitioner's contention regarding audit objections, we had summoned the original file of the Department. Perusal of the file would show that on 24.09.2014, the Audit Party had discussed this claim of the assesse and had referred it as a major irregularity in granting the same. In this note prepared by the Audit Party, we notice that this issue was taken up by the Audit Party with the Assessing Officer, who had replied that the assessee company is engaged in manufacturing stent and had imported certain parts, which were used in manufacturing the final product which was supplied to the distributors. There were huge product complaints from the hospitals using the product. The company, therefore, stopped using the catheters which were found to be defective and returned unused catheters imported from abroad and also recalled the defective material from the market. Such ..... X X X X Extracts X X X X X X X X Extracts X X X X
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